Spanish families rein in their borrowing

Household debt in Spain fell to its lowest level in over six years in September as families continue to deleverage, the Bank of Spain said Monday.

The central bank said the liabilities of families declined 0.5 percent, or by 4.287 billion euros, from August to 798.045 billion, the lowest level since February 2007. Compared with a year earlier the magnitude of the decline was 4.5 percent. Household indebtedness has now declined for three months in a row after a pick-up in June as families took on more consumer loans.

The fall was mainly due to a decline in the value of outstanding home loans, which dropped 4.3 percent from a year earlier to 618.579 billion euros. Mortgages account for 77.5 percent of total household debt. Outstanding consumer loans decreased an annual 5.5 percent to 176.413 billion euros.

Corporate debt fell 6.0 percent in September from a year earlier and 0.27 percent from August to 1.080 trillion euros, the lowest level since April 2007. The drop was largely explained by a decline in the amount owed to resident lenders and off-balance sheet securitized loans, which fell an annual 9.2 percent to 670.569 billion euros. The value of outstanding loans granted by foreign lenders dropped 2.3 percent from September 2012 to 328.344 billion euros.